Entry into a Material Definitive Agreement.
Amendment No. 12 to Third Amended and Restated Credit Agreement
On August 29, 2022 (the “Closing Date”), Harsco Corporation (the “Company”) entered into Amendment No. 12 to Third Amended and Restated Credit Agreement (“Amendment No. 12”) which amends the Company’s Third Amended and Restated Credit Agreement, dated as of November 2, 2016 (as the same has been amended, supplemented or otherwise modified prior to the Closing Date, and as further amended by Amendment No. 12, the “Senior Secured Credit Facility”), by and among the Company, Bank of America, N.A., as administrative agent and as collateral agent, the lenders party thereto, and the other parties thereto.
Amendment No. 12 amended the Company’s existing $700 million revolving credit facility under the Senior Secured Credit Facility (the “Revolving Credit Facility”; and the loans thereunder, the “Revolving Credit Loans”) to, among other things, increase certain levels set forth in the total net leverage ratio covenant, temporarily reduce the ratio under the interest coverage covenant and add a new pricing level applicable to the Revolving Credit Loans. After giving effect to Amendment No. 12, the Revolving Credit Loans bear interest at a rate, depending on total net leverage, ranging from 50 to 175 basis points over base rate or 150 to 275 basis points over LIBOR, subject to a zero floor. Under the Revolving Credit Facility, the Company’s total net leverage is capped at 5.50x of consolidated adjusted EBITDA through the end of 2023; the maximum total net leverage ratio decreases quarterly thereafter, reaching 4.0x for the last quarter in 2024 and thereafter. The total net leverage ratio covenant applicable to the third quarter of 2024 and earlier is subject to a 0.50x decrease upon a sale of the Company’s Rail business (if completed). Pursuant to Amendment No. 12, the Company’s required coverage of consolidated interest charges is set at a minimum of 2.75x of consolidated adjusted EBITDA through the end of 2024 (subject to an increase to 3.0x upon a sale of the Company’s Rail business (if completed)), and leveling at 3.0x for the first quarter in 2025 and thereafter.
In addition, Amendment No. 12 extends the current relief period applicable to certain covenants to the date on which financial statements are delivered for the fiscal quarter ending December 31, 2024 (extended from December 31, 2023), or earlier upon the Company delivering a certificate demonstrating a total net leverage ratio not exceeding 4.0x and a ratio of consolidated EBITDA to consolidated interest charges of not less than 3.0x. For the duration of such relief period, certain of the exceptions to negative covenants are suspended while the step-up to the maximum total net leverage covenant ratio otherwise applicable in connection with a significant acquisition is also suspended.
The foregoing description of Amendment No. 12 is qualified in its entirety by reference to the full and complete terms of Amendment No. 12, which is attached as Exhibit 10.1 hereto and is incorporated by reference herein.
Certain of the agents and lenders providing funding or other services under the Senior Secured Credit Facility, as well as certain of their affiliates, have, from time to time, provided various financial advisory, commercial and investment banking services to the Company and/or its affiliates for which they have received customary fees and commissions.